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A federal appeals court today struck down price caps on intrastate phone calls made by prisoners. Inmates will thus have to continue paying high prices to make phone calls to family members, friends, and lawyers.

The US Court of Appeals for the District of Columbia Circuit sided with prison phone company Global Tel*Link in its lawsuit against the Federal Communications Commission. But that's exactly what the FCC's current leadership wanted. The FCC imposed the prison phone rate caps during the Obama administration, but current FCC Chairman Ajit Pai instructed commission lawyers to drop their court defense of the intrastate caps.

Further Reading

Today's court decision, a 2-1 vote by a three-judge panel, said that the FCC's proposed caps on intrastate rates exceed the commission's statutory authority under the Telecommunications Act of 1996. Intrastate calls are those in which both parties are in the same state; judges noted that the FCC is generally forbidden from regulating intrastate communication services, which is left to individual states.

By contrast, courts have allowed the FCC to cap the price of interstate calls (i.e., calls that cross state lines). So while the FCC was able to implement rate caps of 21¢ to 25¢ per minute on interstate long-distance calls in a 2013 decision, attempts to reduce prices of in-state calls have failed.

Pai promises action, but no specifics

Pai issued a statement on today's court decision, noting that "the DC Circuit agreed with my position that the FCC exceeded its authority when it attempted to impose rate caps on intrastate calls made by inmates."

Going forward, Pai said he intends to "address the problem of high inmate calling rates in a lawful manner," but offered no specific plans.

Several court rulings have limited the FCC's attempts to help prisoners save money on phone calls. The FCC under former Chairman Tom Wheeler voted in October 2015 to impose rate caps of 11¢ to 22¢ per minute on both interstate and intrastate calls from prisons. Inmates' costs are often much higher than the proposed limits, and, in some extreme cases, prisoners have paid $14 per minute, the FCC has said.

After a March 2016 federal appeals court ruling stayed the caps of 11¢ to 22¢ per minute, Wheeler's FCC proposed new caps of 13¢ to 31¢ per minute in an attempt to satisfy the court. But the court decision today and Pai's stance seem to close off the possibility of placing rate caps on intrastate calls.

Further Reading

In addition to saying the FCC exceeded its authority, judges also faulted the commission for the way it used industry-averaged cost data to calculate caps and for excluding "site commission payments" from the calculus. Prison phone companies are contractually obligated to pay these site commissions to correctional facilities in order to provide phone service, and inmates end up paying the price as the costs are passed along to them.

The fate of limits on so-called "ancillary fees" is also now uncertain. These Obama-era limits prevented prison phone companies from charging more than $3 for making automated payments by phone or website; $5.95 for making payments with a "live agent;" and $2 for "paper bill fees." Wheeler's FCC also voted to ban other ancillary service charges.

Today's court decision remanded those ancillary fee caps to the commission "to determine whether it can segregate proposed caps on interstate calls (which are permissible) and the proposed caps on intrastate calls (which are impermissible)." FCC Commissioner Mignon Clyburn, a Democrat, has advocated for strict limits. But as chairman, Pai will take the lead in determining whether the FCC imposes any new inmate calling price limits.

Clyburn today called the court decision a sad one "for the more than 2.7 million children in this country with at
least one incarcerated parent."

“I remain committed to doing everything I can from working with my colleagues at the Commission, to supporting the efforts of Congress and those in the states to bring relief to millions who continue to suffer from the greatest form of regulatory injustice I have seen in my 18 years as a regulator in the communications space," Clyburn said.